June 18, 2000

 

CBOT Soy Review on Tuesday: Rallies on Argentine strike, US crop woes

 

 

Chicago Board of Trade soybean futures rallied Tuesday in a rebound from losses Monday, fueled by a worsening of Argentina's persistent farmers' strike and by U.S. crop woes.

 

July soybeans climbed 24 cents to US$15.58 per bushel, and November soybeans jumped 30 cents to US$15.53. July soymeal surged US$9.20 to US$415 per short tonne, and July soyoil soared 15 points to 65.80 cents per pound.

 

The farm strike is officially targeting grain exports, but many local farm groups also have thrown up roadblocks in protest. Truck owners caught in the crossfire have launched a total shutdown of transport to force the warring parties to resolve their negotiations.

 

The dispute is bullish for the CBOT soy complex because it's preventing grain and soy exports from leaving Argentina. That has been shifting soy demand to the U.S. from South America.

 

Worries about damage to the U.S. soy crop from heavy rains in the Midwest added support. Flood-related agricultural losses in Iowa, the top soy-producing state, will total roughly US$2.7 billion, the vast majority from losses of crops like soy and corn, according to a preliminary estimate generated by researchers at Ball State University and the University of Tennessee.

 

Around 15% to 20% of acreage is a "complete loss" in Iowa, a researcher said, adding that it would be difficult for farmers to replant because of the short growing season in the state, he added. Iowa was expected to plant 13.2 million acres of corn and 9.8 million acres of soybeans this season, according to the U.S. Department of Agriculture.

 

"Argentina, the flood, they're both big issues," said Dale Durchholz, an analyst for ArgiVisor.

 

Durchholz said it was too soon to know how much damage was done from the floods and that replanting in some parts of the Midwest will reduce total acreage losses. Still, fears about reduced yields and acreages should continue to be supportive as the market moves toward the end of the week, he said.

 

Conditions look drier in the corn belt this week, although small thunderstorm clusters are expected to move into northwest Iowa on Monday night and then across Iowa on Tuesday into Wednesday, according to a forecast from T-Storm Weather. Some thunderstorms are also indicated in the eastern Corn Belt next Wednesday, the private weather firm said.

 

Commodity funds bought an estimated 3,000 soybean contracts, a trader said.

 

 

SOY PRODUCTS

 

CBOT soy product futures closed higher, with soymeal seen as a leader in the complex. The Argentine farmers' strike is affecting exports of products, along with soybeans, Durchholz said.

 

"The big thing with Argentina is not the beans they export," he said. "They're a big (soy) product exporter."

 

Soymeal, in particular, has seen strong demand recently, Durchholz said. Commodity funds bought an estimated 2,000 meal contracts and 1,000 soyoil contracts.